Federal Financial Aid

State-provided grants, loan payback programs, private loans, and scholarships can all help you pay the sometimes steep price-tag of a college education in Atlanta. Federal loans, however, are a key to many financial aid packages.

The Perkins Loan is a low-interest loan available from some but not all colleges. The interest rate is 5% and the government pays the interest while you are in school and during a 9-month grace period after you graduate. Eligibility for the Perkins loan is based on financial need.

The Stafford Loan comes in two versions, subsidized and unsubsidized. The government pays the interest on the subsidized loan while you are in school and during the 6-month grace period after graduation. You are responsible for the interest on the unsubsidized Stafford loan, but you can defer repaying it until after the end of the grace period by capitalizing it. This adds the interest to the loan balance, increasing the size of the loan. The interest rate on the unsubsidized Stafford loan is 6.8% for undergraduate and graduate students. The interest rate on the subsidized Stafford loan may be lower for undergraduate students. The subsidized Stafford loan is based on financial need. The unsubsidized Stafford loan does not depend on financial need, so even wealthy students can get it. The loan limits depend on several factors, discussed below.

The PLUS Loan is available to parents of dependent undergraduate students (Parent PLUS loan) and to graduate and professional students (Grad PLUS loan). The interest rate is 7.9%. The PLUS loan does not depend on financial need, so even wealthy students can get it. The PLUS loan has an annual loan limit equal to the cost of attendance minus any other aid received. There is no cumulative loan limit. The PLUS loan requires the borrower to not have an adverse credit history, which is defined as a five-year look-back for certain derogatory elements of the credit history, such as bankruptcy, default, tax liens, wage garnishment, foreclosure and repossession, or a current delinquency of 90 or more days on any debt. If a dependent student's parent is denied a Parent PLUS loan, the student becomes eligible for the higher unsubsidized Stafford loan limits available to independent students.

The Federal Consolidation Loan lets you combine several federal education loans into a single loan and provides access to alternate repayment plans. The interest rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8th of a point, and capped at 8.25%.

The loan limits on the Stafford loan depend on year in school and dependency status.

There are a variety of criteria for independent student status, but the most common ones include: age 24 or older as of December 31 of the award year, married, having dependents other than a spouse, being a graduate or professional student, or being a veteran or active duty member of the Armed Forces.

Starting July 1, 2010, all new federal education loans will be made through the Direct Loan program. To apply for these loans, contact the financial aid office at your college. After you tell the college how much you wish to borrow (up to the annual and cumulative loan limits), they will ask you to sign a Master Promissory Note (MPN). You will have to sign the MPN only once per college, as it is valid for all your federal education loans while you are enrolled.